Marina Coast Water District asks PUC to reject Cal Am's new proposal

California American Water's newly proposed water supply project could be waylaid by a court decision invalidating the regional desalination project's environmental review, even if the Marina Coast Water District is no longer involved.

That is, unless the former regional project partner decides to continue pursuing an appeal of the decision.

That is according to a filing by Marina Coast with the state Public Utilities Commission on Monday.

Marina Coast Water District, California American Water and the Monterey County Water Resources Agency were developing a regional desalination plant when Cal Am announced in January that it was pulling out of the project.

The district's motion seeks to dismiss Cal Am's application for the new Monterey Peninsula Water Supply Project, which would include a Cal Am-owned desal plant north of Marina drawing water from shoreline wells near where the regional project wells would have been.

Cal Am officials said they plan to rely on a supplemental environmental impact report for the new project because it is so similar to its predecessor. They argued the Superior Court decision by Judge Lydia Villarreal on the regional project's EIR no longer applies because the PUC is the appropriate lead agency now that Cal Am has proposed owning the plant.

In a statement, Cal Am spokeswoman Catherine Bowie said, "We are of the opinion the Villarreal decision has no impact on our current proposal, the Monterey Water Supply Project. The decision looked at the Regional Desalination Project and determined that MCWD should be the lead agency, not the PUC. Now that California American Water is proposing to complete the project on its own, the PUC is the lead agency and the Villarreal decision does not apply to this project."

However, Marina Coast's filing pointed out that Villarreal's decision found the regional project EIR failed to address a number of issues, including the availability of groundwater for the project. And, the district said, Cal Am's new water supply project application left unresolved questions.

"Perhaps most ominously, (Cal Am's) Application utterly fails to address how extraction of brackish desalination source water from wells in the North Marina area will be accomplished legally without the participation of a party such as (Marina Coast) — that holds sufficient existing water rights in the Salinas Valley Groundwater Basin," the filing reads.

Villarreal's decision, which came in response to a lawsuit filed by the Ag Land Trust, was finalized in April and the judge ordered Marina Coast to vacate its project approvals within 60 days.

While Marina Coast argued in its filings the decision was erroneous and would be overturned on appeal, general manager Jim Heitzman said the district could decide to simply drop its appeal filed in the Sixth District Court of Appeals last month if it no longer had a compelling interest. That, Heitzman said, would leave Villarreal's decision in place. According to the district's filing, the unresolved legal obstacle would be likely to create a lengthier delay than simply going ahead with the regional project.

In the filing, the former regional project partner continued to argue that the regional project remains the best, most cost-effective water supply proposal, and the only one capable of meeting the 2016 deadline for full implementation of the state-ordered cutback in pumping from the Carmel River.

The regional project has already been judged superior to the north Marina alternative that is being proposed as the new water supply project, the filing said, and should proceed.

"We understand the need for a new water supply on the Peninsula, and we also know there was a two-year process up at the (PUC) where all the projects were considered and the regional project was judged the best," Heitzman said. "We still believe that and we still believe we have valid contracts."

Bowie said Cal Am is committed to the new project, saying it will be fully vetted through the PUC process.

"We believe our application puts forth the best solution to the Monterey Peninsula's urgent water supply issues. We are at the very beginning of a transparent and open review process led by the PUC that will no doubt include a great deal of comment and challenge from any number of potential intervenors and parties to the proceeding. The PUC will take these concerns into consideration and manage the process according to the community's best interest."

In its filing, Marina Coast accused Cal Am of working against the regional project, and asked the PUC to require Cal Am to proceed with the proposal. It also asked the PUC to insist the county Water Resources Agency perform its project-related duties or re-assign them.

Failing that, the PUC should formally declare a "project cessation" under the regional project agreements and address project reimbursement issues.

Marina Coast officials have suggested the district is out more than $10 million in project-related costs.

The county has also spent nearly $4 million on the regional project, and is seeking reimbursement of about half that amount from Cal Am.

As part of her decision, Villarreal found that the regional project EIR's assumption that water rights would be "perfected" in the future was impermissible because that didn't allow a full public review of the project's potential consequences.

She found the project's lead agency under state environmental law would need to address water rights, a contingency plan, the assumption of constant pumping, the exportation of groundwater from the Salinas Valley basin, brine impacts, effects on adjacent properties, and water quality.